Kokesh v. Securities and Exchange Commission

On June 5, 2017, the U.S. Supreme Court ruled that the Securities and Exchange Commission may not seek “disgorgement” of gross income allegedly derived from securities-law violations that occurred decades ago. The decision was a victory for WLF, which filed a brief urging reversal of an appeals court decision that upheld SEC’s position. The Court agreed with WLF that a federal statute, 28 U.S.C. § 2462, imposes a strict five-year statute of limitations on any “penalty” sought by SEC. The Court rejected SEC’s claim that requiring a wrongdoer to pay to the government all his allegedly ill-gotten income (termed “disgorgement” by SEC) did not constitute a “penalty.” This decision imposes significant restrictions on a broad range of federal agencies (not simply SEC) because § 2462 imposes a five-year catch-all limitations period on any federal enforcement action to which no other statute of limitations explicitly applies.